Tuition Tax-Credit Scholarships are a way for legislators to allow indirect public support for private schools with little or no financial transparency or accountability for student achievement.


The Oklahoma Equal Opportunity Scholarship Act law was originally approved in 2011 and has been revised a few times since. Since its inception, the act has had two mechanisms through which donors can receive state tax credits to reduce or eliminate their tax liability:

  • Scholarship-granting organizations (SGOs) effectively underwrite private school tuition for qualifying students. Cap: $3.5 million.
  • Educational improvement granting organizations (EIGOs) distribute grants to eligible schools for innovative educational programs. (Donations directly to schools and local education foundations aren’t eligible for tax credits). Cap: $1.5 million.

Donors can receive tax credits of up to 75 percent up to $1,000 for single filers, $2,000 for married filers and $100,000 for businesses per year. Currently, donors to scholarship-granting organizations are allowed up to $3.5 million in tax credits while donors to organizations benefiting public schools are capped at $1.5 million. If either side uses less than its full allotment of tax credits, the other side can offer the remaining portion to its donors.

In 2017 and 2018, scholarship-granting organizations received donations in excess of the available tax credits, even after claiming unused tax credits from the public school side of the program. Unused tax credits can be carried over and claimed for up to three years. The tax commission must publish by Feb. 15 of each year the percentage of the contribution for which a donor may receive a credit. (This is the only annual public reporting requirement of the act).

The EIGO portion of the program has never hit its cap. In 2017 and 2018, SGO donors received a prorated credit (86.5 percent and 91.1 percent, respectively) for their donations due to the cap

How Scholarship Granting Organizations Work:

Students are eligible for scholarships in multiple ways. In each case, they must be “lawfully present” in the United States, and once eligible, will remain eligible without a subsequent qualification standard for continued eligibility. Here are the eligibility pathways:

  • Annual household income not exceeding 300 percent of free- and reduced-price lunch standard (approximately $139,000 for a family of four).
  • Resident eligible in the prior year to attend a public school identified by SDE for school improvement. This eligibility path has no income limit.
  • Has received services under an Individual Family Service Plan through SoonerStart and determined eligible for school district services; a school-age child who has attended public school in Oklahoma with an IEP; or a child diagnosed by a clinical professional as having a significant disability that will affect learning. This eligibility path has no income limit.

501c3s may apply to the tax commission to become an SGO and grant scholarships for students accepted to qualifying private schools. The SGO requirements are:

  • It must agree to spend 90 percent of its funds on scholarships (the total amount available to award as scholarships over the last 24 months divided by the total amount of funds awarded over last 24 months).
  • It must send scholarship payments as checks made out to the student’s parent or guardian and mailed to the school.
  • It must spend a portion of its expenditures on scholarships for low-income eligible students (defined as qualifying for free or reduced lunch) in the amount equal to or greater than percentage of low-income eligible students in the state. About 62 percent of public school students statewide receive free- or reduced-price lunches, according to the latest state Education Department report.
  • It must ensure scholarships are portable and can be used at any qualified school that accepts the student.
  • It must report once every four years to the Governor, President Pro Tempore of the Senate and the Speaker of the House of Representatives, an audited financial statement for the organization along with information detailing the benefits, successes or failures of the program.

How Educational Improvement Granting Organizations Work:

Receiving an educational improvement grant:

  • A school is eligible to receive an educational improvement grant if it is not within a 10-mile radius of a private school that qualifies for the SGO program or is within a 10- mile radius of a private school that qualified for the SGO program but offers grade-level instruction different from the private school.
  • The public school also must be in a district with fewer than 4,500 students.
  • Qualifying schools must use a third-party granting organization to benefit from the program.
  • “Innovative educational program” eligible for grants as defined in the law means an advanced academic or academic improvement program that is not part of the regular coursework of a public school but that enhances the curriculum or academic program of the school or provides early childhood education programs to students. Early childhood education program is defined as a program for eligible special needs students who are 3 years old or a pre-K program for children who are 4 but not 5 by Sept. 1.

501c3s may apply to the tax commission to become an EIGO. Note: donations to school districts or local education foundations do not qualify for tax credits. EIGO requirements are:

  • It must agree to spend 90 percent of cash receipts for grants to eligible schools for innovative education programs. Funds expended or encumbered during the current year or next fiscal year will be counted as its cash receipts.
  • It must report annually the name of the innovative education program or programs and the total amount of grant(s) during preceding school year; description of how each grant was used; names of schools/districts that received grants; total number and total amount of grants made during preceding school year by county.
  • It must report once every four years to the Governor, President Pro Tempore of the Senate and the Speaker of the House of Representatives, an audited financial statement for the organization along with information detailing the benefits, successes or failures of the program.

Additional Information:

Very little information is available about SGOs and EIGOs authorized under the Oklahoma Equal Opportunity Scholarship Act.

  • The Oklahoma Tax Commission has denied open records request for even basic information, including the applications of SGOs and EIGOs to participate in the program, documents demonstrating the number and total dollar value of contributions to SGOs and EIGOs and documentation demonstrating SGOs and EIGOs are in compliance with statutory provisions.
  • The Opportunity Scholarship Fund appears to the be the largest SGO. It has sought to lower the percentage of scholarship dollars required to low-income students. Its reporting so far appears to show it is below the 62 percent bar that’s equal to the percentage of low-income public school students as measured by free and reduced lunch.
  • Its most recent report shows OSF spends about 54 percent of its scholarship dollars on low-income students as defined in law. It spends 19 percent of its scholarship dollars for students whose families exceed the 300 percent of FRL level.
  • In other states with similar programs including Indiana, reports are showing many students never attended a public school.
  • Not requiring a third-party organization and removing other limitations currently in law would make it simpler for public schools to participate. However, making it easier for public schools to benefit from the tax credit program isn’t a substitute for funding that allows school districts to address the teacher shortage, lower class sizes, restore cut programs and opportunities, and focus on innovation.
  • Oklahoma has made significant strides over the past year in improving revenue to fund public education and other state services. Increasing tax credits robs the state of potential revenue.
  • Oklahoma remains more than $1,100 per student behind the regional average in education investment. Foregoing revenue could make it more difficult to sustain and increase education funding.

Transparency Needed:

Far more transparency is needed for the Opportunity Scholarship Act, consistent with reporting requirements for similar programs found in other states including Arizona and Alabama. Legislation is needed that would require the scholarship-granting organizations to annually report and for the Oklahoma Tax Commission to make available on its website:

  • The name and address of the scholarship-granting organization.
  • The names of the qualifying schools that received funding for educational scholarships, the total amount of funds paid to each qualifying school and the total number of scholarship recipients enrolled in each qualifying school.
  • The total number and total dollar amount of contributions received and educational scholarships awarded during the previous academic year.
  • The total number, total dollar amount and percentage of educational scholarships awarded and funded during the previous academic year disaggregated by students who qualify for free- and reduced-price meals and students with special needs.
  • Whether scholarship students previously attended a public or private school.
  • The percentage of the total amount of education scholarship expenditures spent on low-income eligible students, and the percentage of annual revenue received by the organization which was not expended on scholarships.

Scholarship-granting organizations would also be required to annually confirm they meet legal requirements under the Equal Opportunity Scholarship Act.


A family of 4 earning up to $142,000 a year can receive a private school scholarship. That’s nearly triple the median Oklahoma household income.

The state’s largest scholarship-granting organization wants to lower the required percentage of donations they dedicate to serving children from low-income families.

The largest scholarship-granting organization has failed to meet the required percentage of donations dedicated to serving children from low-income families & instead wants to lower the requirement.

Tuition tax credits are tax cuts for corporations and the wealthy, shifting the burden of funding public education and other core state services to other taxpayers.

One scholarship-granting organization bragged the tax credits are “like a gift card from the state of Oklahoma.”

Redirecting resources to private schools erodes the ability of public schools to serve the 425,000 children from low-income families attending public schools.

The state is giving away millions of dollars in tax credits. In 2016-2017, corporations received more than $2 million in tax credits for donating to private schools.

Private schools accepting tuition tax-credit scholarship students aren’t required to report any information about the achievement of scholarship students.

Private schools make the choice about which students they select. (Oklahoma Watch: Scholarship Schools Exclude Disabled Students From Discrimination Protections)

Scholarship-granting organizations actively advertise how donors can use the law to eliminate the associated state tax liability and even turn a profit by accepting tax credits while claiming state and federal charitable deductions.


Private school choice programs like tuition tax-credit scholarships (also called tuition tax-credit scholarships) are focused on helping children from low-income families.

Families receiving tuition tax-credit scholarships can choose their child’s school.

Tuition tax-credit scholarships improve student achievement.

Tuition tax-credit scholarships help public schools.

Tuition tax-credit scholarships are good for the state budget.
Catholic Schools Opportunity Scholarship Fund
Sources: Oklahoma Equal Opportunity Scholarship Act, Opportunity Scholarship Fund Legislative Report, Catholic Schools Opportunity Scholarship Fund, Institute on Taxation and Economic Policy